February 17, 2012

Marilyn Tavenner
Acting Administrator
Centers for Medicare & Medicaid Services
Department of Health and Human Services
Room 445-G
Hubert H. Humphrey Building
200 Independence Avenue, S.W.
Washington, D.C. 20201

RE: CMS 2315-P: Medicaid; Disproportionate Share Hospital Payments-Uninsured Definition, (Vol. 77, No. 11) January 18, 2012

Dear Ms. Tavenner:

On behalf of our 32 acute care and specialty hospitals New Hampshire Hospital Association (NHHA) appreciates the opportunity to comment on the Centers for Medicare & Medicaid Services’s (CMS) proposed rule that expands the definition of uninsured for purposes of calculating the hospital-specific limitation for Medicaid disproportionate share hospital (DSH) payments.

The Medicaid DSH program provides critical financial assistance for safety net hospitals serving our nation’s most vulnerable populations. The NHHA supports greater transparency and accountability in how the state Medicaid DSH programs function. The Medicaid DSH Audit program could be a useful tool toward that end. However, the NHHA has expressed repeatedly concern over CMS’s implementation of the audit program, particularly in how unreimbursed costs are defined. The NHHA is pleased that in this proposed rule, CMS begins to address some of those concerns through changes in the definition of uninsured and the clarification that all costs incurred in providing hospital services to Medicaid patients should be counted. But the agency needs to do more work to improve the audit program. Our comment letter focuses on those areas where further clarification is needed or the definition of uninsured costs should be expanded. We also make recommendations concerning the rule’s effective date.


The NHHA appreciates CMS’s efforts to further clarify the definition of uninsured for purposes of calculating each hospital’s specific DSH limit. We strongly support the agency’s proposal to allow unreimbursed costs for those individuals with minimal health care coverage in the hospital-specific limit. Additionally, the NHHA asks CMS to make further clarifications and modifications to the definition of uninsured and uncompensated care costs with respect to:

  • Service-specific coverage determination, and;
  • Unpaid high-deductible plan costs.

Service-Specific Coverage Determination: The NHHA urges CMS to consider uncompensated care provided after benefits are exhausted as “uninsured” uncompensated costs. The proposed rule clarifies that the determination of an individual’s third-party coverage status is a service-specific measure based on the coverage and benefit exclusions of the health insurer. Thus, if an individual did not have insurance for the particular hospital service provided, the hospital can count those unreimbursed costs as uncompensated care costs The rule also clarifies that hospitals can include as uncompensated care costs services provided to individuals who may have exhausted their benefit coverage, or reached annual or lifetime insurance limits. But, the draft regulatory language appears less flexible than the preamble language. The proposed regulatory language states that: “The service-specific coverage determination can occur only once per individual per service provided and applies to the entire service…” This language seems to exclude situations where individuals exhaust their coverage during a lengthy hospital stay, such as patients in a neonatal or burn unit. The NHHA requests that for service-specific coverage, CMS allow for redeterminations during the stay if the individual’s benefits are exhausted during the stay, at which point the individual would be treated as uninsured for the remainder of the stay.

High-Deductible Plan Costs: The NHHA urges CMS to expand its treatment of underinsured costs for purposes of calculating the hospital-specific DSH limit to include unreimbursed costs associated with non-payment of copayments and deductibles, particularly for high-deductible plans. The proposed rule goes a long way toward recognizing unreimbursed hospital costs associated with health insurance that may have benefit exclusions or annual or lifetime limits. But hospitals also are bearing the burden of unreimbursed costs associated with high-deductible or catastrophic health plans where the individual has no means of paying the deductible amounts. These are legitimate uncompensated care costs and should be included in the DSH limit calculation.


The NHHA urges CMS to apply these proposed changes to the definition of uninsured on a retrospective basis, at a minimum, to audit year fiscal year (FY) 2009. The effective date for the proposed changes suggests that they would apply, in most cases, to audit year FY 2011.

Since states have not completed FY 2009 audits, the NHHA recommends that CMS apply these definitional changes to that audit year. These changes will be critical in determining whether hospitals have reached their DSH limit and should be applied as soon as possible to the audit determinations.

The NHHA looks forward to working through AHA with CMS staff to improve the Medicaid DSH Audit program. If you have any questions regarding our comments, please contact me or Paula Minnehan, VP, Finance and Rural Hospitals, at 603-415-4254 or This email address is being protected from spambots. You need JavaScript enabled to view it..


Steve Ahnen